Mortgage Loan Originator TILA and RESPA Compliance 2 — Questions and Answers
Question 1: Under TILA, a borrower has a right of rescission for how many business days on a refinance of their primary residence?
- 1 business day
- 2 business days
- 3 business days (Correct answer)
- 5 business days
Correct answer: 3 business days
TILA grants borrowers a three-business-day right to rescind a refinance transaction involving their principal dwelling with a new lender.
Question 2: Which RESPA section requires lenders to provide an annual escrow account statement to borrowers?
- Section 6
- Section 8
- Section 9
- Section 10 (Correct answer)
Correct answer: Section 10
RESPA Section 10 limits the amount lenders may require in escrow accounts and mandates annual escrow account disclosure statements.
Question 3: Under TILA, the 'finance charge' includes all of the following EXCEPT:
- Mortgage broker fees
- Loan origination fees
- Hazard insurance premiums paid to insurer of borrower's choice (Correct answer)
- Discount points
Correct answer: Hazard insurance premiums paid to insurer of borrower's choice
Hazard insurance premiums paid to an insurer chosen by the borrower are excluded from the finance charge under TILA.
Question 4: RESPA's affiliated business arrangement (AfBA) disclosure must be provided:
- At closing only
- At the time of referral to an affiliated service provider (Correct answer)
- Within three days of application
- When the appraisal is ordered
Correct answer: At the time of referral to an affiliated service provider
When a settlement service provider refers a consumer to an affiliate, RESPA requires the AfBA disclosure to be given at the time of that referral.
Question 5: Which TRID form replaced the HUD-1 Settlement Statement?
- Loan Estimate
- Closing Disclosure (Correct answer)
- Settlement Summary
- Final Truth-in-Lending
Correct answer: Closing Disclosure
The Closing Disclosure replaced the HUD-1 Settlement Statement and the final Truth-in-Lending disclosure under the TRID rule effective October 2015.
Question 6: Under RESPA, a 'controlled business arrangement' is now referred to as:
- Preferred provider arrangement
- Affiliated business arrangement (Correct answer)
- Joint venture agreement
- Captive reinsurance arrangement
Correct answer: Affiliated business arrangement
RESPA amendments renamed 'controlled business arrangements' to 'affiliated business arrangements' (AfBA), which require specific disclosure when referrals occur.
Mortgage Loan Originator TILA and RESPA Compliance 2
Under TILA, a borrower has a right of rescission for how many business days on a refinance of their primary residence?